Friday, July 12, 2024

Corruption Eradication Commission named former Pertamina CEO Karen Agustiawan as suspect in corruption case

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Imanuddin Razak




The Corruption Eradication Commission (KPK) has officially named the former CEO of PT Pertamina (Persero), Karen Agustiawan, as a suspect in a corruption case related to the procurement of liquefied natural gas (LNG).

To facilitate the investigative process, the Investigative Team has detained Karen for the initial 20 days, starting from September 19, 2023, until October 8, 2023, at the KPK Detention Center.

KPK Chairman Firli Bahuri has disclosed the underlying issues that have entangled former PT Pertamina CEO Karen Agustiawan in the procurement of Liquefied Natural Gas (LNG) for PT Pertamina Persero from 2011 to 2021.

Firli has indicated that Karen Agustiawan’s designation as a suspect was further substantiated by sufficient preliminary evidence, warranting the commencement of a formal investigation.

Background of the case

Karen previously served as the CEO of PT Pertamina (Persero) from 2009 to 2014.

The alleged wrongdoing by Karen is believed to have occurred around 2012 when PT Pertamina (Persero) was planning to acquire LNG as an alternative solution to the gas deficit in Indonesia.

In her capacity as the CEO of PT Pertamina Persero, Karen made the unilateral decision to enter into agreements with several LNG producers and suppliers from abroad, including Corpus Christi Liquefaction LLC from the United States, without conducting a thorough study or analysis. Furthermore, she failed to report this decision to the Board of Commissioners of PT Pertamina.

Additionally, no reports were submitted for discussion at the General Shareholders’ Meeting (RUPS), and consequently, the government did not provide its consent and approval for Karen’s actions at that time.

Low uptake and losses incurred

During the process, all LNG cargoes purchased by PT Pertamina Persero from the American company were not absorbed in the domestic market.

As a result, there was an oversupply of LNG, and none of it was ever delivered to Indonesia.

To address the oversupply situation, the existing LNG inventory had to be sold at a loss in the international market by PT Pertamina Persero. Karen’s actions in this regard were deemed to be in violation of various regulations, including:

  • The Resolution of the General Shareholders’ Meeting dated August 1, 2012, regarding the Articles of Association of PT Pertamina Persero.
  • Minister of State-Owned Enterprises Regulation No. PER-05/MBU/2008 dated September 3, 2008.
  • Minister of State-Owned Enterprises Regulation No. PER-01/MB/2011 dated August 1, 2011.
  • Minister of State-Owned Enterprises Regulation No. PER-03/MBU/08/2017 on Guidelines for State-Owned Enterprises Cooperation.

Karen’s actions are suspected to have caused financial losses to the state amounting to approximately US$140 million, equivalent to IDR 2.1 trillion. Karen has been charged with violating Article 2 paragraph (1) or Article 3 of the Republic of Indonesia Law No. 31 of 1999 on the Eradication of Corruption, as amended by Law No. 20 of 2001, in conjunction with Article 55 paragraph (1) clause 1 of the Indonesian Criminal Code.

Imanuddin Razak






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